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The New York Times loses its mind over Tesla

Oh dearie me, this is a bit of a fail from the Grey Lady. After New Jersey banned Tesla from selling cars direct in that State, after Elon Musk took to his blog in rage, the NYT ran a piece insisting that, really, there was merit on all sides here. The piece, by Jad Mouawadma, contained this quite alarming assertion:

But most states have some limits on direct sales by auto manufacturers, according to the National Automobile Dealers Association. These rules are generally meant to ensure competition, so that buyers can shop around for discounts from independent dealers, and to protect car dealers and franchises from being undercut by the automakers.

It’s true that most states do have some limits, but it’s also true that they’re all piffle, and should be called out as such. For a start, just think about that point about customers being able to shop around for discounts: OK, that means that some people selling the item might be willing to take a lower margin than others doing so. Hey, great for consumers then. But that’s also exactly the same thing as one seller being able to undercut another. Which is the thing that the same regulations are trying to ban.

As I’ve said here before these regulations are simply the exertion of political power in order to gain cash (aka, screw the consumer) for those wielding the political power. There is no other justification or cause here.

For those who might wonder about the future of the car dealers if the manufacturers are allowed to bypass them, the correct answer is “so fucking what?”

If the dealers are adding value to the consumer then the dealers will survive. For they’re doing what a producer should be doing, adding value to said consumer. And if the consumers think that avoiding car salesmen is something they want to do and buying at list price off a website is also something they want to do then the dealers will all go bust. Which at the level of the entire economy is just excellent. For the point and purpose of it all is to produce value added that the consumers get to enjoy. And we’re just copacetic at the idea that organisations which consume inputs but do not add commensurate value go bust and bye bye. So that those inputs, the labour, land, capital, can be put to other uses, ones which produce more of that value the consumers crave.

Whether dealers do add value or not I have no idea. Elon Musk says one thing, dealers say another and, well, they would, wouldn’t they? But it is obvious that if dealers do they would survive in a free market and if they don’t they would not. Which is a very good reason why we shouldn’t have laws protecting them from said market.

Tim Worstall is a Senior Fellow at the Adam Smith Institute in London, a freelance writer whose work has appeared in the WSJ, The Times, Daily Telegraph, The Register, Forbes online and a number of other places. He is also in his day job an expert in the rare earth metal, scandium. A strange thing to be but someone has to be and in this flavour of our universe Worstall is it. He apologises in advance for his Englishness and the manner in which his spelling will waver from accepted American standards at times.